Good, bad China sourcing experts

Sourcing from China is difficult; that is what we are being convinced by the sourcing agents and consultants. There are the language barriers, cultural differences, unreliable suppliers, fluctuation of prices, complex distribution channels, etc. you name it.

Yes, all the above mentioned can be a big challenge for a foreign company not familiar with China market. However, can all this bullying be tactics of sourcing experts to make their clients dependant on their ”expertise”? More I hear the stories of these experts have made themselves irreplaceable to their clients by appealing to the almost impossible conditions in China, more I am convinced that they are not doing their job right. Aren’t we as China experts responsible of finding solutions to overcome the challenges and easen the way of our clients in China?

Sourcing from China requires expertise of local market, that is for sure. However, the procedure of building reliable supply network is not more mystical than in any other country. Language barriers can be solved by using skilled interpreter, reliable suppliers can be found by sorting out the potential suppliers and making a proper factory audit and maybe paying a personal visit to the factory, as well as by investing in the win-win relationship with the supplier.

We keep hearing that all the documents can be faked in China. Yes, they can; I have seen many faked documents, unfortunately. I heard a very clever story from my dear colleague Deze about  how to ensure that the factory is providing correct information on their  capabilities and references of supplying abroad. Zhejiang Tailong Bank (which could be actually an interesting contact  for small Finnish companies targeting China market) came up with an idea to ensure the reliability of the factory:

  1. Check the electricity consumption.
  2. Check the water consumption.
  3. Check the customs duties paid.

Three simple things and you get a lot of information on the factory operations. This is just one simple and practical example of how to make a background check on the potential supplier.  I feel that making China to look like a big and hungry lion’s throat, we fail as China experts. Our job, instead, should be to facilitate our clients to create their own China strategy and become China experts themselves. It is pure lack of self-confidence to scare your clients by telling all the ”horror” stories of China. Instead, as the the China sourcing expert, you should smoothen the way and let your clients learn on the side to become experts themselves.

5 thoughts on “Good, bad China sourcing experts

    1. Jun, AFAIK you can set the history on in IMs like Skype, MSN and QQ. Also, it’s not a bad idea to cut and paste the verbatim discussion to a PDF and send it as an attachment to a memorandum email that summarizes the main points of the agreement.

  1. Dear Jun,

    You are absolutely right! We still have a lot to learn on how to deal with the communication as the differences between Chinese and Western businessmen are evident. But there are ways to overcome these obstacles and in the long-run mutual trust can be built.

  2. Good points, I will also add that you should really travel and see vendors before transferring your hard earned cash.
    Alternative is to use sourcing company like this one http://www.pa-international.com.au They reduce the risk and do the local running around. Some time getting you actually a better price and service.

    You can also contact your local government for trade commissioner in China and ask them to do a company checks for you, some charge for this service others – do not. They also can advice on the list of possible vendors if you are lucky.

    Mick

    1. You are absolutely right Mick. Face-to-face contact and factory audits are highly recommended. I also support the idea of using the services of professional sourcing company as they indeed may reduce the risk and get better prices from their existing supplier network.

      The Finnish trade commissioners charge money for sure, but they also have wide existing supplier network. It is easy to find services, but finding the right fit seems to be the most challenging task 😉

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